Guide to Financial Management
With organizations driven to deliver on performance targets, such as shareholder value or level of service, managers are expected to make decisions fully understanding their financial consequences. Few nonfinancial specialists are prepared for the responsibilities of dealing with management reports, budgets, and capital proposals. Many find themselves confused by jargon and embarrassed by their lack of understanding.
Guide to Financial Management is a practical resource for understanding and managing these financial responsibilities. It is structured by task, such as “how to assemble a budget” or “how to construct a proposal to invest in new equipment.”
John Tennent—who has worked with such major companies as Kraft, Thomson, British Airways, Unilever, and Universal Music—helps the reader understand financial jargon, financial statements, performance measures, budgeting, costing, pricing, decision making, and investment appraisals—all of which are key to being a successful manager.
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happens a common defensive strategy is to cut the price and spend more on marketing, which has the effect of moving the product upwards and to the right on the matrix. Other products which can become ideal are fashion goods, where demand for them exceeds supply and allows high pricing, until demand drops, supply increases, or a competitive threat emerges, and what was once ideal becomes ordinary. FIG 7.5 Business optimisation matrix Highly vulnerable businesses are those such as big
or service can be summarised in three parts: market characteristics, direct forces and limiting forces (see Table 9.1). The factors listed in Table 9.1 can be used to identify where on the vertical axis the market is positioned. Competitive strength This is a judgment on how well the business can compete against its competitors. It is important to find the critical points of differentiation or advantage: asset base or cost advantage; management strength; lower cost of capital; unique
the right price, and then managed effectively. The ability to exit a project halfway through can be limited (particularly if the investment is in specialist or bespoke assets), which reinforces the need to evaluate the potential returns on any investment robustly before funds are committed. Organisations use the business case process to structure project proposals, evaluate their potential and seek approval from a range of sponsors and executives. The decision becomes collective, shared among
business can develop efficiencies is by using products such as, in the case of an accountant, a software package to process tax returns. The mix of product and service elements in the customer proposition will define the need for acquiring assets and hiring staff. Structuring a business for flexibility The investment of cash in assets and staff will define the flexibility that a business will have in responding to a changing business environment. A rapid increase in the need for assets